LAW6000 Business and Corporate Law Case Study Sample
This assessment allows students to solve practical problems that arise from a fact scenario and to give appropriate advice to clients.
There are five case studies you are required to critically analyse.
With respect to each case study:
- Identify the legal issue(s) arising from the facts of the casestudy
- Identify the appropriate legal rules that requires discussion in the case study
- Apply the law to the facts of the case study
- Reach a conclusion/ give practical advice to your client.
Your analysis should refer to appropriate cases and statutes and be referenced using the APA
James has recently decided to open up a consultancy business near the city. He has identified appropriate premises and immediately gets into negotiation with Bradley, the landlord. He wishes to lease the commercial property for a period of five years. James proposes to demolish some of the interior walls to allow for better lighting and to then fit out the space to suit the modern image that he desires for his business. James and Bradley agree that the work would be completed in one month. It is agreed that once a lease agreement is signed James can commence the work in preparation to move into the premises. James signs his part of the agreement and sends it to the offices of Bradley’s solicitors. He then commences the work to demolish the walls and fit out the premises. Three weeks later as James was about to complete the fit out of the premises, he learns that Bradley has yet to sign the agreement and has in fact entered into negotiations with Simon with a view to leasing the premises to Simon.
James has completed a substantial amount of work and is preparing to move in. He has in fact printed all his stationery. He approaches Bradley who says that there was in fact no contract and that he is likely to lease the premises to Simon. James is distraught and seeks your advice.
With reference to relevant legal principles, use the IRAC legal problem-solving approach to advise James on whether he is able to enforce the agreement with Bradley and the remedies that may be available to him. Use appropriate case law in support of your answer.
Elizabeth is a major shareholder in Millennial-Relics Pty Ltd. Elizabeth and has noted that the company maintains the old-fashioned ‘memorandum of association’ which has been prepared for Millennial-Relics Pty Ltd.
The objects clause as drafted, limits the objects of the company to the development, manufacture and sale of motor vehicle batteries. Elizabeth believes that the research work that Rahim is doing (and future technology which may be developed as the full implications of Rahim’s work are realised) may have spin- offs into a number of related areas including dynamos for driver-less electric cars.
Elizabeth has spotted an opportunity that may allow the company to enter into a contract with like-minded companies for the development of state of the art dynamos that will be compatible with all types of electric cars. She is however concerned that the narrowness of the ‘memorandum’ may hamper the company’s ability to move into the emerging lucrative area and also the development and commercial exploitation of the dynamos which the company’s ongoing research may uncover may not be pursued lawfully. Elizabeth has read that there is no legal reason to have a memorandum or articles, even if they are now called a corporate constitution. The company’s research may also expose potentially exploitable products or secret processes in other areas related to artificial intelligence. When Elizabeth raised these concerns with the company’s other shareholders, they told her that they had been advised by the lawyers that this was the standard form for their companies, and that there was no cause for concern. Elizabeth is not convinced.
With reference to relevant legal principles use the IRAC legal problem-solving approach to advise Elizabeth of the company’s position regarding any new contracts that it may enter in connection with the development of dynamos for driver-less electric cars and also explain how the replaceable rules may be of use to the company in the future.
In December 2020 Greg Napole was driving along a busy street with his spouse and two children in the car. As they approached a busier section of the road Greg had to slow down significantly and as he was driving past a nearby park, a southern blue gum tree fell onto the car that he was driving killing wife Marsha and seriously injuring his two children and himself. Greg and his two children were hospitalised for two months with several broken bones. Upon recovery, Greg learnt that the tree had fallen because its root system had been destroyed by underground water leaking from a water channel that had been constructed by the local council, City of Small-town Council, in the year 1998. Greg is keen to have the council compensate him for the injuries he and his children have suffered and for the loss of his wife.
The local council has denied liability. They claim not to have a duty of care to Greg and his family. Greg wishes to pursue his claim and has now come to you for advice.
With reference to relevant legal principles use the IRAC legal problem-solving approach to advise Greg as to whether he would be successful in negligence against City of Smalltown Council. Please explain fully, using relevant case law.
Jaswant and his two friends, Davinder and Lachlan have been in a partnership for the last three years. Their business has grown and they now wish to expand into other states and territories. Their other friend Nicholas is a solicitor and he advises them to incorporate their business under the Corporations Act 2001 (Cth) to take advantage of the principle of separate legal entity and to allow them to trade in any state without having to comply with local partnership legislation. Jaswant, Davinder and Lachlan have brought in some of their own assets into the business and their partnership agreement specifically states that the assets will remain their individual property. They are concerned that they may not be able to do this after incorporation. They are also concerned about whether they will be able to contract with the company for the provision of some of the services the national business will be delivering. They each have specialist skills and are hoping to be remunerated by the business for their skills. The three friends have also agreed to appoint Nicholas as the company solicitor and would be the only solicitor used by the company. This would be set out in the constitution that Nicholas would draw for the company. Lachlan is however concerned that if their relationship with Nicholas becomes strained, it may be difficult to use another solicitor if he chooses to enforce the constitution. Lachlan now approaches you for advice.
With reference to relevant sections of the Corporations Act 2001 (Cth) and appropriate case law, use the IRAC legal problem-solving approach to advise Lachlan of the effect and consequences of converting their partnership into a company and further whether Lachlan would be able to enforce the envisaged constitution if they wanted to use a different solicitor.
Rahab is an executive working for a large pharmaceutical company which has recently transferred her to an overseas branch to manage the roll out of a global vaccine. She decides to leave the apartment where she lives and to put her household goods in storage. She contacts a company known as KingStore Pty Ltd, which specialises in the storage of goods. The company agrees to store Rahab’s goods for the period she will be away.
Before signing the contract of storage, Rahab asks about the condition of the building in which her goods will be stored. She has heard about recent floods in the state and just wants to be sure that her goods will be safe. The company manager replies: “Our building is in excellent condition. We built it only two years ago and we used the best building materials. Your goods are safe with us.”
Rahab decides to enter into a written contract with the company and stores her goods with them. The contract which she signs does not, however, say anything about the condition of the building, nor does it make any reference to the other statements made to Rahab by the company manager concerning the quality of the building materials.
Some months later, the company telephones Rahab at her new place of work and advises her that her goods have been badly damaged due to recent heavy rainfall which caused water to enter the building in which Rahab’s goods have been stored, and to damage them. The reason for the entry of the water into the building is that the building was badly built and poor building materials were used. As a result, the building’s foundations sank when the heavy rainfall fell, thereby causing a large gap between the bottom of the doors to the building and the floor of the building where the goods were stored. Rahab now wants to sue the KingStore Pty Ltd for the loss she has incurred as a result of the damage to her goods.
With reference to relevant legal principles use the IRAC legal problem-solving approach to advise Rahab of her legal position at common law against the storage company and discuss what remedies would flow from them. Give full reasons and use any relevant case law. Do not consider any statutory rights.
The main issue is to assess enforceability of contract in case terms and conditions have been agreed by both the parties but not signed by one of the party.
Enforceability of contract
The elements necessary for enforcing agreement between two parties in accordance with provision of Australian contract law is as follows:
• It is necessary to have clear offer from one party and another party must have provided acceptance against same.
• It is necessary that consideration must have been provided against promise.
• The evidence of mutual intention of legally enforcing contract should exist.
• The terms of contract should be certain (Australian contract law, 2019).
• The parties of contract should be capable to enter into contract or agreement.
Remedies for breach of contract
The two remedies available for breach of contract is as follows:
Common law remedies: This refers to damages and liquidation claims provided as ‘substitute’ for performance. For Assignment help Further, liquidation damages can be claimed in can specified sum has been provided in contract in context with breach of contract (Australian contract law. 2019).
Equitable remedies: The two equitable remedies are specific performance i.e. making order to perform contract and second is injunction i.e. giving order to not to do contract.
The decision provided in case of Australian Woollen Mills v The Commonwealth (1954) 92 CLR 424 could be considered for clarifying existence of offer as it asserts same as expression of a party for being bound to stated terms i.e. it is something more than declaration of person stating his or will to negotiation (Australian Woollen Mills v The Commonwealth (1954) 92 CLR 424). In others actual terms should be accepted by the party. In present case both the parties have accepted to the terms of contract and do have mutual intentions to be enforcing the contract legally. As it has been clearly provided that both the parties accepted the terms and agreed that work would complete in one month. Further, only formality of signing is left and no objection has been made after receipt of agreement signed by Bradley till three week where on the other has substantial amount of work has been completed. Further case of Empirnall Holdings v MachonPaull (1988) could be applied in present case which asserts that no specific form of acceptance is required for enforceability of contract.
It can be concluded that above specified remedies i.e. common law remedies and equitable remedies can be claim as contract has been breached by Bradely.
In present case existing position of company in context with making new contract is to be accessed along with explanation relating to replacing rules which may be use to company in future.
Memorandum of Association (MOA)
As per section 125 of Corporation Act 2001 MOA refers to document which regulates company’s external affairs such as form, structure and objects. Further it has been provided that company can choose to include objects clause in its constitution (Corporations Act 2001).
Section 141 of Corporations Act 2001
It asserts that company registered before 1st July 1998 would require memorandum of association and article of association. However, companies registered after 1st July 1998 may be governed by replaceable rules as per section 141 of Corporation Act 2001. Replaceable rules refer to set of minimum rules in context with management of company and its employees (Graw, 2017). These rules are replaceable in case an organization makes decision to adopt a constitution i.e. it can either incorporate or replace provision with its own.
In present case as existing object clause is limited to manufacture and sale of motor vehicle batteries and does not include electric cars; thus before making any contract relating to same it is necessary to amend memorandum of association in order to continue business operations in smooth manner. Further regarding replaceable rules, in case company is registered after 1st July 1998 than it does not require MOA and AOA and it can govern its operations in accordance with ‘Replaceable Rules’ as per section 141 of Corporation Act 2001 (Memorandum of Article of Association, 2020).
It can be concluded that decision of use of replaceable rules depends on date of registration of company and contract which are not covered in existing object clause can be made after making appropriate amendment in object clause of memorandum of association.
To assess where claim can be made in context with negligence against City of Smalltown Council as heavy loss has been suffered by Greg due to same.
Provision for ‘Tort of Negligence’
Negligence occurs in case one party fails to take reasonable care in order to avoid causing damage to another person. Thus, the four factors necessarily to be proven for claiming loss due to negligence is availability of duty of care, breach of duty, damage and causation (Stevens, 2017, p 17).
Damages for Negligence
Damages are considered as prime remedy for tort action of negligence i.e. nominal damages, aggravated damages, punitive damages and compensatory damages. These can be claimed on the basis of nature of negligence (Tort of Negligence, 2020). Nominal damages are provided in case plaintiff does not succeed in proving any injury or damage and compensatory damages are provided in case of serious invasions. Punitive damages are awarded in case of breach of confidence or tort relating to misuse of personal information as in case of Weller v Associated Newspapers Ltd  EWHC 1163 (QB).
In present case loss has been suffered by Greg due to accident as the tree fell while he was driving. The main reason behind accident was felling of tree; the incident occurred as the root system of tree was destroyed due to underground water leaking channel which has been constructed by local council, City of Small town council. Thus, it would be appropriate to state that it was their duty to ensure that it is maintained appropriately and no loss has been occurred to general public due to same. The recent decision provided in case of Libra Collaroy Pty Ltd v Bhide  NSWCA 196 could be considered where decision was provided that landlord is responsible for collapsed balcony as it was his responsibility to provide appropriate structural integrity of the balcony (Libra Collaroy Pty Ltd v Bhide  NSWCA 196). Further, the decision provided in case of Thistle Co of Australia Pty Ltd v Bretz (2018) asserts that it is responsibility of innocent person to prove negligence in order to claim damages as remedy, thus Breg would require proving that he has suffered heavy loss due to negligence of City of small town council.
It can be concluded that in present case all the four variants for proving negligence are available i.e. of duty of care, breach of duty, damage and causation. As City of small town council was responsible for management of water channel and due to its leakage the tree fell down which eventually resulted in accident. Further, breach has been made by not maintain water channel appropriately and damage has been borne by Greg in form of accident due to the accident. Thus, Greg would succeed in claiming damages in context with accident against City of small town council for its negligence.
In present case Lachlan is dealing with issue regarding effect and consequences of converting their partnership into company. Another issue to be considered is to assess whether Lachlan would succeed in enforcing envisaged constitution in case they wanted to use different solicitor.
Consequence and effect of converting partnership into company
• As per Australian provisions, in order to convert partnership into company, it is necessary to dissolve partnership as it cannot be transferred into company. Even it is necessary to cancel Australian Business Number (ABN) relating to partnership.
• It is necessary to ensure whether it would be proprietary or public company and it is to be registered with ASIC (Lopes et al, 2020).
• Further, existing assets should represented as owed to company; as it will have separate legal entity assets owned by same would only be part of business.
• The key principle required to be considered is that in case directors of company does not accomplish their responsibility appropriately than they would be responsible personally for debt incurred by company.
• Directors are liable for remuneration in accordance with their skills and experience i.e. their contribution to the business operation (Ndzi, 2017, p1).
In present case the three partners are Davinder, Jaswant and Lachlan wanted to convert their partnership into company. Thus, initially they would require dissolving their partnership in order. Further, as the business structure would be of company; thus they would be able to operate in overseas market or change product function in order to accommodate this growth as advantage of corporate structure. It can be accessed from above analysis that as company does have separate entity; thus the assets which would be in name of company would be considered as business asset only. In present case as all the three partners have bought some of their assets in partnership and now they wanted same to remain their individual property; hence they would not be able to claim expenses relating to same as it is no more part of business. In context with remuneration it would be appropriate to state that they would be able to claim remuneration only if they are appointed as director of the company (Ndzi, 2017, p 1). Lastly, main perception to be considered in case of corporation business structure is they require accomplishing their obligation with business perception rather than personal else they would be responsible for debt or damages relating to specific transaction.
It can be concluded that above specified effects and consequences are to be considered by all the three partners regarding transforming partnership into company. Further, Lachlan would not be able to enforce envisaged constitution in case they distinct to different solicitor as in corporate business structure decision are taken by majority of shareholders by passing appropriate resolution.
Assessment of remedies in present case loss has been occurred by Rahab as damage to her goods as the building in which goods were kept was damaged.
Provision relating to misrepresentation
Misrepresentation refers to providing wrong information to one party by another between which contracts has been made (Australian contract law, 2019). Further, it has been provided that in case one of the parties of contract relies on misrepresentation and suffers loss then they can claim damages or cancel the contract.
Remedies for misrepresentation
Rescinding the contract: The claimant can rescind the contact in case the party who has suffered opt for same.
Damages: It is alternative of rescission i.e. to claim for loss due to relying on misrepresentation. However, the person could not succeed in claim in case they fail in proving that they do have reasonable grounds for believing that they do have reasonable grounds to believe that misrepresentation statement was true (Stevens, 2017).
The decision provided in case of Google Inc V ACCC  asserts that in case it has been appropriately stated that the party of contract is not responsible for facts or statements provided in advertisement than they cannot be held responsible for same. Thus, it is necessary that decision has been made on the basis of statement provided by one of the party and claimant is not aware that these are untrue (Google Inc V ACCC ). In present case as Rahab made contract after ensuring that goods were kept in storage which was having good condition and was not aware that another party was providing false statement knowingly. Hence, he would claim damages in context with goods provided to another party.
In accordance with above provisions as King Store Pty Ltd. has provided misrepresentation and contract has been dependent on same; thus Rahab would succeed in claiming loss in context with damage relating to goods.
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